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Federal Communications Commission DA 17-395
Before the
Federal Communications Commission
Washington, D.C. 20554
In the Matter of
Verizon Virginia, LLC and Verizon South, Inc.,
Complainants,
v.
Virginia Electric and Power Company
d/b/a Dominion Virginia Power,
Respondent.
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Proceeding No. 15-190
Bureau ID No. EB-15-MD-006
ORDER
Adopted: May 1, 2017 Released: May 1, 2017
By the Acting Chief, Market Disputes Resolution Division:
I. INTRODUCTION
1. In this interim Order, we address two threshold issues raised in a pole attachment complaint
by Verizon Virginia, LLC and Verizon South, Inc. (collectively, Verizon) against Dominion Virginia
Power (Dominion), challenging the contractual rates that Verizon pays to attach to Dominion’s electric
utility poles. First, we find that the rates Verizon pays for its attachments to Dominion’s poles are not just
and reasonable, in violation of Section 224(b)(1) of the Communications Act. Second, we conclude that
Verizon is entitled to a refund of overpayments it may have made prior to filing its Complaint, subject to
true up of the post-Complaint period in question. We issue this interim order on two threshold issues to
expedite final resolution of this case in a subsequent order or by settlement.1
II. BACKGROUND
A. Legal Framework
2. Pole attachment rates are the charges that owners of utility poles, including electric utility
companies, assess when cable television operators, telecommunications carriers, and others attach their
lines to utility poles. Section 224(b)(1) of the Communications Act of 1934, as amended (Act),
authorizes the Commission to adopt rules to ensure, inter alia, that the rates, terms, and conditions of
“pole attachments” are “just and reasonable.”2 Prior to 2011, the Commission construed the “just and
reasonable” requirement of Section 224(b)(1) to apply to attachments by cable companies and
competitive local exchange carriers (LECs), but not to attachments by incumbent LECs, like Verizon.3
1 We express no views at this time with respect to the remaining issues raised in the Complaint.
2 47 U.S.C. § 224(b)(1); id., § 224(a)(4) (definition of “pole attachment”). See also 47 CFR §§ 1.1401-1.1424 (Pole
Attachment Complaint Procedures).
3 Implementation of Section 224; A National Broadband Plan for our Future, Report and Order and Order on
Reconsideration, 26 FCC Rcd 5240, 5328, para. 205 & n.614 (2011) (Pole Attachment Order), aff’d sub nom. Am.
Elec. Power Serv. Corp. v. FCC, 708 F.3d 183 (D.C. Cir. 2013).
Federal Communications Commission DA 17-395
2
Under separate provisions codified in subsections 224(d) and (e),4 respectively, the Commission
established formulas to calculate just and reasonable pole attachment rates for cable attachers (Cable
Rate) and competitive LEC attachers (Old Telecom Rate).5
3. In 2011, the Commission released the Pole Attachment Order, in which it adopted a revised
formula under Section 224(e) for computing the pole attachment rate paid by competitive LECs (New
Telecom Rate), “thereby reducing the disparity between current telecommunications and cable rates.”6
The Commission also concluded for the first time that the “just and reasonable” requirement of Section
224(b)(1) applies to the rates, terms, and conditions governing attachments by incumbent LECs, such as
Verizon.7 The record indicated that, although incumbent LECs had in the past owned nearly as many
poles as electric utility companies, incumbent LEC pole ownership rates had declined,8 leading the
Commission to conclude that “market forces and independent negotiations may not be alone sufficient to
ensure just and reasonable rates, terms and conditions for incumbent LEC[] pole attachments.”9 The
order identified “a need for targeted Commission oversight” of incumbent LEC attachment agreements
“to ensure just and reasonable rates, terms, and conditions that might not otherwise result from
negotiations standing alone.”10
4. In the Pole Attachment Order, the Commission also recognized the necessity of analyzing
incumbent LEC attachment rates “in a manner that accounts for the potential differences between
incumbent LECs and telecommunications carrier or cable operator attachers.”11 It noted that incumbent
LECs are unique in that they own many poles and have historically obtained access to electric utility
poles through “joint use” agreements.12 The Commission observed that such joint use arrangements
typically provide incumbent LECs a number of advantages not afforded to telecommunications carrier
and cable attachers, such as guaranteed space on poles, lower make-ready costs, and the ability to attach
without obtaining advance approval.13 In light of those differences, the Commission did not adopt a
4 47 U.S.C. § 224(d) (describing cable rate formula); id. § 224(e) (describing telecommunications carrier rate
formula).
5 Pole Attachment Order, 26 FCC Rcd at 5296-97, paras. 129-31 (discussing adoption of separate formulas for
determining maximum allowable just and reasonable pole attachment rates for providers of cable service and
telecommunications carriers). For purposes of Section 224, the term “telecommunications carrier”- which is
otherwise defined as “any provider of telecommunications services,” 47 U.S.C. § 153(51) - “does not include any
incumbent local exchange carrier.” See 47 U.S.C. § 224(a)(5).
6 Pole Attachment Order, 26 FCC Rcd at 5244, para. 8. The Old Telecom Rate compensated pole owners for “fully
allocated costs,” which are the costs a pole owner incurs in installing and maintaining poles even if there are no
other attachers. The New Telecom Rate excludes recovery for a number of these costs, and usually results in a rate
that is closer to the Cable Rate. Id., 26 FCC Rcd at 5300-01, paras. 141-42.
7 See id., 26 FCC Rcd at 5331, para. 209 (“incumbent LECs are entitled to pole attachment rates, terms and
conditions that are just and reasonable pursuant to Section 224(b)(1)”); see also id. at 5243-44, 5327-28, 5330,
paras. 8, 202, 208. Unlike cable and competitive LEC attachers, however, incumbent LECs have no right of access
to utilities’ poles pursuant to Section 224(f)(1). Id. at 5328, 5329-30, 5332-33, paras. 202, 207, 212 & n.643.
8 Id. at 5328-29, para. 206.
9 Id. at 5327, para. 199.
10 Id. at 5244, para. 8.
11 Id. at 5333, para. 214.
12 Id. at 5334, para. 214.
13 Id. at 5335, para. 216 n.654.
Federal Communications Commission DA 17-395
3
formula for calculating the rate to be paid by incumbent LECs, opting instead to resolve incumbent LEC
disputes on a case-by-case basis in complaint proceedings brought before the Commission.14 The
Commission found it reasonable to use the Old Telecom Rate “as a reference point” in complaint
proceedings filed by incumbent LECs to “account for particular arrangements that provide net advantages
to incumbent LECs” relative to competitive LECs.15
B. The Joint Use Agreements and the Parties’ Dispute
5. Dominion and both Verizon South and Verizon Virginia have longstanding relationships as
joint users of poles owned by Dominion or Verizon in the parties’ overlapping service areas in Virginia.16
The record reflects that Dominion has at all times relevant to this proceeding owned approximately 65
percent of the parties’ joint use poles.17 In 2006, Dominion and Verizon South began negotiating a new
joint use agreement to replace a prior agreement in effect since 1978.18 Thereafter, Dominion and
Verizon Virginia similarly agreed to replace their prior joint use agreement in effect since 1992.19
Although the parties concluded negotiations and reached an agreement in principal in late 2010,
Dominion and Verizon executed virtually identical agreements (Joint Use Agreements)20 in May and
August 2011, respectively,21 with an effective date of January 1, 2011.22
14 Id. at 5328, 5334, paras. 203, 214. See also id. at 5287, para. 102 & n.319 (indicating that in order to expedite
pole attachment complaints, “whenever possible, the Enforcement Bureau will resolve pole attachment complaints
itself, to the extent permitted by its delegated authority.”).
15 Id. at 5337, para. 218.
16 See Verizon Virginia LLC and Verizon South Inc. v. Virginia Electric and Power Company d/b/a/ Dominion
Virginia Power, Proceeding No. 15-190, Bureau ID No. EB-15-MD-006, Pole Attachment Complaint, at 42, para.
90 (Aug. 3, 2015) (Compl.) (referencing the parties’ decades-old relationship); Verizon Virginia LLC and Verizon
South Inc. v. Virginia Electric and Power Company d/b/a/ Dominion Virginia Power, Proceeding No. 15-190,
Bureau ID No. EB-15-MD-006, Response to Pole Attachment Complaint, at 4 (Nov. 18, 2015) (Resp.) (referencing
a succession of reciprocal attachment agreements dating back over seventy years). Any reference to the parties’
historic joint use agreements includes any predecessor companies of the parties, as relevant.
17 The shared Dominion-Verizon network consists of [BEGIN CONFIDENTIAL] [END
CONFIDENTIAL] poles, with Dominion owning or controlling [BEGIN CONFIDENTIAL] [END
CONFIDENTIAL] poles (65 percent) and Verizon owning or controlling [BEGIN CONFIDENTIAL]
[END CONFIDENTIAL] poles (35 percent). See Compl. at 6-7, para. 6; Resp., Exh. B (Declaration of William
Zarakas) at 3, para. 4 (Zarakas Decl.); Resp. at 13 (“[T]he parties agree that the balance of pole ownership between
Dominion and Verizon has not varied over the last several decades of their joint use relationship.”); see also Reply
at 11.
18 Compl., Exh. B (Affidavit of Stephen Mills) at 4, para. 10 (Mills Aff.); Resp., Exh. A (Declaration of Michael
Graf) at 3, 5, paras. 5, 10 (Graf Decl.).
19 Compl., Exh. B (Mills Aff.) at 4, para. 10; Resp., Exh. A (Graf Decl.) at 5, para. 10 n.9.
20 See Compl., Exh. 1, General Joint-Use Agreement Between Verizon Virginia and Dominion (Jan. 1, 2011)
(Verizon Virginia Agreement); Compl., Exh. 2, General Joint-Use Agreement Between Verizon South and
Dominion (Jan. 1, 2011) (Verizon South Agreement).
21 Compl. at 6, para. 5 & n.17; Resp. at 5 & n.14; id., Exh. A (Graf Decl.) at 3, 5, 6, 7, paras. 5, 10, 14, 16; Compl.,
Exh. B (Mills Aff.) at 4, 6-7, paras. 10, 18. Although Verizon does not indicate when the Joint Use Agreements
were executed, it does not dispute Dominion’s representation that they were executed by Dominion and Verizon in
May and August 2011, respectively.
22 See Joint Use Agreements, Recitals.
Federal Communications Commission DA 17-395
15
record shows that the parties then embarked on another 20 months of rate negotiations that concluded on
May 29, 2015 without resolving the contested issues, and that Verizon then filed its Complaint on August
3, 2015.103 Consistent with the Commission’s decision authorizing refunds to extend back as far as the
applicable statute of limitations allows,104 but no earlier than the Pole Attachment Order effective date,
we reject the suggestion that, by waiting until August 3, 2015, Verizon unduly delayed filing its
Complaint.105
IV. CONCLUSION
29. In light of our interim findings that the Joint Use agreement rate is not just and reasonable,
we direct the parties to meet and confer in an effort to resolve the remaining disputes. The parties should
report to Commission staff within 30 days as to their progress. If the case cannot be resolved by
settlement, Commission staff will conduct any further proceedings necessary to issue a subsequent order
resolving all remaining issues and setting a just and reasonable pole attachment rate.
30. Accordingly, IT IS ORDERED, pursuant to the authority contained in Sections 4(i), 4(j), 208,
224, 301, 303, 304, 309, 316, and 332 of the Communications Act, 47 U.S.C. §§ 154(i), 154(j), 208, 224,
301, 303, 304, 309, 316, and 332, and Sections 0.111(a)(12), 0.311, 1.720-1.735, and 1.1401-1.1424 of
the Commission’s rules, 47 CFR §§ 0.111(a)(12), 0.311, 1.720-1.735, and 1.1401-1.1424, that the
Complaint is GRANTED, in part, to the extent set forth in this Order.
FEDERAL COMMUNICATIONS COMMISSION
Rosemary H. McEnery
Acting Chief
Market Disputes Resolution Division
103 Compl. at 13-17, paras. 21-30; Resp. at 7-9; Compl., Exh. 23 [BEGIN CONFIDENTIAL]
[END CONFIDENTIAL] (May 29, 2015)).
104 Verizon contends that Section 8.01-246(2) of the Virginia Code provides the applicable statute of limitations in
this case and that its Complaint was filed within the five-year limitations period specified therein. See Reply at 9
n.33. Dominion does not dispute this contention.
105 We also reject Dominion’s claim that Verizon’s alleged failure to comply with Rule 1.1404(k) offers a basis to
deny the requested relief. Resp. at 38-40. Dominion does not dispute that Verizon engaged in extensive executive-
level discussions, [BEGIN CONFIDENTIAL] [END CONFIDENTIAL] in a serious effort to
resolve the parties’ dispute prior to filing its Complaint. Contrary to Dominion’s claim, however, the record reflects
that Verizon’s March 25, 2014 letter, in conjunction with other correspondence within the same timeframe, fully
outlined the basis for Verizon’s demand for a just and reasonable rate under Section 224(b) and the Pole Attachment
Order. See, e.g., Compl., Exhs. 13, 14, 16, 18, 22, 23. Based on evidence that Verizon fully complied with the
substantive goals and requirements of Rule 1.1404(k) (i.e., executive-level, pre-Complaint coordination and preview
of substantive allegations), we find good cause to waive any procedural aspect of the rule with which Verizon may
not have strictly complied. See 47 CFR § 1.3 (allowing waiver of Commission rule for “good cause shown”).